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The Medicare Option
January 24, 2008 • Volume 8, Issue 4The three leading Democratic presidential candidates all propose, as part of their plan to cover the uninsured, to give people the option to receive health coverage from a government-run, Medicare-like health plan as well as from the private insurance companies they have now.
A public option could help keep the for-profit insurance companies honest by making them compete with a program that can set a high standard for efficient delivery of high-quality care.
That is kind of how Medicare works now—there is a choice between Original Medicare and private insurance plans that contract with Medicare to deliver benefits to people with Medicare—but the competition is so skewed in favor of private companies that it does little to promote either efficiency or quality.
- Private Medicare health plans are paid on average 12 percent more per enrollee than it would cost to care for the same person under Original Medicare. These overpayments reward inefficiency. The plans that offer the least in care coordination—private fee-for-service plans—receive subsidies that average 19 percent more than Original Medicare costs.
- Original Medicare is barred from offering Part D prescription drug coverage; only private companies can offer Part D plans. Medicare is barred from using its power to negotiate lower prices or its influence to promote cost-effective prescribing.
- Original Medicare coverage with a supplemental Medigap policy provides protection against catastrophic medical expenses. Many private Medicare health plans sell themselves as a cheaper alternative to a Medigap, yet some leave people with much higher out-of-pocket costs than they would have paid with Original Medicare alone.
Over its 43-year history, Medicare has been a remarkable success, providing secure, affordable coverage to older adults and people with disabilities who were abandoned by private insurers. It is a testament to how great the Original Medicare program is that, despite how skewed the system has been set up in favor of the private plans, over 80 percent of people with Medicare still choose the government-run Medicare program.
To keep Medicare strong, both drug coverage and catastrophic coverage must be made available directly through Original Medicare. Original Medicare and Medicare private health plans should compete on a level playing field.
We should be building on the success of Medicare, not on the failures of the private plans.
Medical Record
“…[T]he future of Medicare may well tell us what kind of health care all of America will eventually have. Will we conquer budget challenges and find a way to continue Medicare as a successful social insurance program? Or will we privatize the program to mirror the rest of the U.S. health insurance system, with its holes and shortcomings?” (“Campaign Desk: Medicare Mystery,” Columbia Journalism Review, Trudy Lieberman, January 2, 2008).
“…[G]iving people the option of joining a government plan might make for a sensible experiment. ‘It could be a really fair way to test the market, both in terms of people's preferences and to see what kind of plan can be more successful over time,’ said health economist Marilyn Moon, a Medicare and Social Security trustee during the Clinton administration” (“Democratic Hopefuls Agree on Medicare as a Healthcare Model,” Los Angeles Times, Ricardo Alonso-Zaldivar, January 21, 2008).
“A report by the House Government Oversight Committee Minority Staff found Part D prices were on average 60 percent higher than what Canadian consumers pay, which are capped at the average price charged in seven industrialized countries. This report also found that discounts obtained by Part D plans were within three percent of the prices available at discount retailers such as Drugstore.com and Costco. ... Although the rebates and other remuneration that Part D plans receive from drug manufacturers are closely held secrets, the evidence is strong that they fall short of the discounts that government health care programs—Medicaid, the VA, health systems in other industrialized countries—have been able to secure, and, therefore, the price concessions a Medicare-administered drug benefit could be expected to achieve (The Best Medicine: A Drug Coverage Option Under Original Medicare, Medicare Rights Center, October 2007).
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MRC’s new Medicare Part D Appeals: An advocate’s manual to navigating the Medicare private drug plan appeals process offers an easy-to-understand, comprehensive overview of the entire appeals process, including real-life case examples, a glossary of important appeals terms, a sample protocol for advocates, and links to important resources.
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Medicare Part D Monitoring Project
The Medicare Rights Center (MRC) would like to hear about your experience, or that of someone you know, enrolled in a Medicare private drug plan. With information about what the issues are with Medicare Part D, we will be able to demand that those problems be fixed.
Submit your story at http://www.medicarerights.org/partdstories.html.
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The Louder Our Voice, the Stronger Our Message
Asclepios—named for the Greek and Roman god of medicine who, acclaimed for his healing abilities, was at one point the most worshipped god in Greece—is a weekly e-newsletter designed to keep you up-to-date with Medicare program and policy issues, and advance advocacy strategies to address them. Please help build awareness of key Medicare consumer issues by forwarding this action alert to your friends and encouraging them to subscribe today.
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The Medicare Rights Center (MRC) is the largest independent source of Medicare information and assistance in the United States. Founded in 1989, MRC helps older adults and people with disabilities get good, affordable health care.
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